Small Benefit Exemption Increased to €1,500 from 1st January 2025

If you’re an employer or employee in Ireland, there’s great news coming in 2025! The Small Benefit Exemption is increasing, allowing employees to receive more tax-free benefits each year. From 1st January 2025, the annual exemption will rise to €1,500, giving businesses and employees an opportunity to maximise savings and rewards without incurring tax liabilities.

What is the Small Benefit Exemption?

The Small Benefit Exemption allows employers to provide employees with vouchers or other non-cash benefits tax-free each year. This means that neither the employer nor the employee has to pay PAYE, PRSI, or USC on these benefits, making it a highly efficient way to reward staff.

Under the updated rules:

·         Employees can receive up to 5 benefits per year, totalling up to €1,500.

·         If more than 5 benefits are given, only the first 5 qualify for tax-free treatment.

·         The benefit must be in the form of a voucher or non-cash item – it cannot be exchanged for cash.

·         Any unused allowance cannot be carried forward to the following year.

Why Should Employers Take Advantage of This?

As an employer, offering tax-free benefits is a cost-effective way to reward employees while also improving retention and morale. Since these benefits are fully deductible as a business expense, companies can save on payroll costs while enhancing their employee benefits package.

Using the full €1,500 exemption means employees receive the maximum value without any deductions, making it a much more attractive alternative to taxable bonuses or salary increases.

How Can Employees Make the Most of It?

If your employer offers the Small Benefit Exemption, be sure to use it before the end of the year – since any unused allowance cannot be carried forward. Whether it’s for shopping, travel, wellness, or dining, these tax-free benefits can make a significant difference to your take-home rewards.

The increase in the Small Benefit Exemption from €1,000 to €1,500 in 2025 is a great opportunity for both employers and employees to maximise tax-efficient benefits. Employers should consider implementing a structured benefit scheme to ensure their staff can fully avail of this incentive.

If you’re unsure how to integrate this into your company’s payroll and tax strategy, our team of experts can help!

Get in touch today to ensure you’re making the most of this valuable tax-free benefit.

Contact Us